By Thanong Khanthong
China continues to hoard gold en masse. In June, China imported 104.6 tonnes from Hong Kong. That would bring China’s gold imports from Hong Kong to 1,160 tonnes since the beginning of this year. Officially, China reports its total gold holdings at around 1,000 tonnes. Yet speculation is widespread that it could be holding somewhere between 7,000 to 10,000 tonnes, surpassing the United States’ 8,113 tonnes. China is apparently preparing to adopt an impending gold standard.
Also, China has been entering currency swap contracts with other countries to bypass the US dollar. It has currency swap agreements with Brazil, Russia, Iran, Australia and the UK, to name a few. This scheme is developing fast to supplant the dollar with the yuan.
So it is not a surprise that China is building up its gold reserves in preparation for a big bang revolution of the global financial system.
Even with the strong demand for gold from China, Russia and India, gold prices have continued to be hammered down. Gold prices peaked at almost $1,900 per ounce in September 2011. Now, gold prices are struggling to keep to the $1,300 level. Many commentators, from Mexican billionaire Hugo Salinas Price to former US assistant secretary for the Treasury, Paul Craig Roberts, believe that the gold price squeeze is the work of central planners, who would like to protect the value of the dollar.
We are now seeing a battle in the gold market, which reflects a broader currency war. The central planners are holding down the gold prices, while China, Russia, India and other central banks and funds are accumulating physical gold in preparation for a big change. This seesaw battle will continue until the great unravelling.
Interest rates are on a rise. If the US Federal Reserve fails to get control over the bond market, we are going to witness a crisis. Then gold will shine again as China and other countries move to adopt a gold standard to replace the fiat currency system. By that time, history will have been rewritten.